Lunenburg, Fred C. Human Resource Planning- Forecasting Demand Supply IJMBA V15 N1 2012

7/30/2019 Lunenburg, Fred C. Human Resource Planning- Forecasting Demand Supply IJMBA V15 N1 2012

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INTERNATIONAL JOURNAL OF MANAGEMENT, BUSINESS, AND ADMINISTRATIONVOLUME 15, NUMBER 1, 2012

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Human Resource Planning:

Forecasting Demand and Supply

Fred C. LunenburgSam Houston State University

______________________________________________________________________________

Abstract

Human resource planning begins with a forecast of the number and types of employees

needed to achieve the organizations objectives. Planning also involves job analysis,which consists of the preparation of job descriptions and job specifications. Of particularconcern for todays executives is the growing body of laws regulating the human

resource management process.

______________________________________________________________________________

Human Resource Management Process

The overall human resource management process comprises the followingprograms: human resource planning, recruitment, selection, professional development,performance appraisal, and compensation. In this article, I examine one of the humanresource management processes (human resource planning), because it is such animportant function that is often neglected.

The planning function, in general, involves defining an organizations goals,

establishing a strategy for achieving those goals, and developing a comprehensive set ofplans to integrate and coordinate activities (Robbins & Judge, 2013). The necessity ofthis function follows from the nature of organizations as purposive (goal-seeking) entities(Gibson, Ivancevich, Donnelly, & Konopaske, 2012). Planning activities can be complexor simple, implicit or explicit, impersonal or personal. For example, a human resource

manager forecasting demand for the firms human resources may rely on complexeconometric models or casual conversation with human resource personnel in the field.

Good human resource planning involves meeting current and future personnelneeds. The manager ensures that personnel needs are met through ongoing analysis ofperformance objectives, job requirements, and available personnel, coupled withknowledge of employment laws.


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Work sampling. A variation of the observation technique is the work samplingapproach. The job analyst periodically samples employees activities and behavior on

jobs that have long cycles, that have irregular patterns of activity, or that require a varietyof different tasks. For example, research on the administrative demands of department

heads consistently shows that they are fragmented and rapid fire.A personnel administrator could examine the job activities of twenty-five or thirtycompany executives on a given day or randomly select twenty-five or thirty days of theyear and observe the job activities of five executives during those days. This approach issimilar to the one used by Henry Mintzberg (1998) when he undertook a careful study offive executives to determine what they did on their jobs.

On the basis of his observations, Mintzberg concluded that company executivesperform ten different, highly interrelated roles, which he divided into three categories:figurehead, leader, liaison (interpersonal); monitor, disseminator, spokesperson,decisional (informational); and entrepreneur, disturbance handler, resource allocator,negotiator (decisional). Mintzberg, however, went well beyond the work sampling

approach in his analysis of executives. He used a combination of ethnographic techniquesincluding observation, interviews, document analysis, and structured questionnaires toobtain his data.

Critical incidents. Another variation of the observation technique, known ascritical incidents, examines only those job activities leading to successful or unsuccessfulperformance. This approach is similar to the trait approach used to identify effective andineffective leaders. An outside consultant, an immediate supervisor, or a job incumbentcan conduct this technique. Direct observation and the two variations thereof arefrequently used in conjunction with interviewing.

Interviews. Probably the most widely used technique for determining what a jobentails is the interview technique, and its wide use attests to its advantages. Observationof an organizations labor relations specialist, for example, would only reveal that therole incumbent conducts research, handles conflicts, prepares proposals andcounterproposals, confers with management, and negotiates at the bargaining table. Thismethod fails to identify other important aspects of the job, such as analytic thinking andproblem solving. Interviewing the labor relations specialist allows that person to describeimportant activities of the job that might not be revealed through direct observation.

Questionnaires. Many organizations use job analysis questionnaires to elicitinformation concerning what a job entails. Such questionnaires have at least twoadvantages. First, they can pool the responses of numerous job incumbents and comparejob activities across many jobs, using a standard set of common dimensions. Second,questionnaire can generate much information quickly and inexpensively. For example, ajob analyst could administer a questionnaire to 100 job incumbents in less than it wouldtake to observe a single job or interview one job occupant.

The U.S. Air Force has developed the Comprehensive Occupational DataAnalysis Program (CODAP) (Christal & Weissmuller, 1977). It elicits data abouthundreds of job tasks. Another popular, structured job analysis questionnaire is the


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INTERNATIONAL JOURNAL OF MANAGEMENT, BUSINESS, AND ADMINISTRATION4____________________________________________________________________________________

Position Analysis Questionnaire (PAQ) developed at Purdue University. It consists of194 items designed to assess six broad categories of work activity: information input,mental processes, work output, relationships with others, job context, and other jobcharacteristics such as working irregular hours (McCormick, Mecham, & Jeanneret,

1972). The PAQ is inadequate for analyzing upper-level cognitive processes such asabstract thinking and strategic planning. Well-known instruments designed to elicitinformation about upper-level administrative jobs include the Management PositionDescription Questionnaire (MPDQ) and the Professional and Managerial PositionQuestionnaire (PMPQ) (Tornow & Pinto, 1976; Mitchell & McCormick, 1979).

Forecasting Demand and Supply

The second phase of human resource planning, forecasting demand and supply,involves using any number of sophisticated statistical procedures based on analysis andprojections. Such forecasting techniques are beyond the scope of this discussion.

At a more practical level, forecasting demand involves determining the numbersand kinds of personnel that an organization will need at some point in the future. Mostmanagers consider several factors when forecasting future personnel needs. The demandfor the organizations product or service is paramount. Thus, in a business, markets andsales figures are projected first. Then, the personnel needed to serve the projectedcapacity is estimated. Other factors typically considered when forecasting the demandfor personnel include budget constraints; turnover due to resignations, terminations,transfers, and retirement; new technology in the field; decisions to upgrade the quality ofservices provided; and minority hiring goals (Noe, 2012).

Forecasting supply involves determining what personnel will be available. Thetwo sources are internal and external: people already employed by the firm and thoseoutside the organization. Factors managers typically consider when forecasting thesupply of personnel include promoting employees from within the organization;identifying employees willing and able to be trained; availability of required talent inlocal, regional, and national labor markets; competition for talent within the field;population trends (such as movement of families in the United States from Northeast tothe Southwest); and college and university enrollment trends in the needed field (Ball,2012; Henderson, 2010).

Internal sources of employees to fill projected vacancies must be monitored. Thisis facilitated by the use of the human resource audit, or the systematic inventory of thequalifications of existing personnel. A human resource auditis simply an organizationalchart of a unit or entire organization with all positions (usually administrative) indicatedand keyed as to the promotability of each role incumbent.

Figure 1 depicts a human resource audit, or inventory chart, for a hypotheticalfirm. As Figure 1 indicates, the president can see where he or she stands with respect tofuture staff actions. The presidents successor is probably the vice president foroperations. This person has a successor, operations manager, ready for promotion.Subordinates to the manager of operations are two department heads who are promotablenow, three who will be ready for promotion in one or two years, two who are notpromotable, and one who should be dismissed.


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The other subordinate to the vice president of operations, the sales manager, issatisfactory but not promotable. That person has two department heads who arepromotable now, one who will be promotable with further training, and one who issatisfactory but not promotable.

The vice president of finance requires further training before being ready forpromotion. Here is a person who knows the job of business management extremely wellbut lacks training in other aspects of the presidency, such as operations, personneladministration, marketing, sales, and the like. Some of the accountants reporting to thevice president for finance are promotable now, while others either are not promotable orrequire additional training before being ready for promotion.

The vice president of personnel, while occupying a very specialized function, ispromotable now. Subordinates to that person occupy such specialized jobs that, althoughperforming these roles satisfactorily, they require additional training before being readyfor promotion to vice president of personnel.

The vice president of research and development was a newly created position in

this hypothetical organization. Because of the specialized nature of the position, thatperson requires considerable training before being ready for promotion. Subordinates tothat position are designated similarly.

Future needs and the potential of the existing administrative staff have beenidentified, and weaknesses have been uncovered. These data can help administrators planimmediate promotions for personnel from within the organization who are promotable,plan for appropriate training and development of others, or dismiss those who areunsatisfactory. If there are an insufficient number of candidates inside the firm to fillvacancies, staffing specialists typically analyze labor markets.


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Figure 1. Human resource audit for administrative personnel.

Legal Constraints

Legislation designed to regulate hiring practices affects nearly every aspect ofemploymentfrom human resource planning to compensation. Our intent is not to makemanagers into attorneys but to examine the basic laws that relate to employmentdecisions. Managers must avoid possible charges of discrimination on the basis of race,color, gender, national origin, age, or disability (Cushway, 2011; Moran, 2011). Table 1summarizes some of the major laws pertaining to the personnel process.

OperationsManager

SalesManager

Accountants

President

Vice President of

Research and

Development

Vice President of

Finance

VicePresident of

Operations

Vice President of

Personnel

Department

Head

Department

Head

P. Lewis

J. Bolado

V. Tate

B. Nash

N. Ross

P. Garcia

D. Smith

T. Huang

R. Brown

L. Budd

A. Katz

E. Moss

H. Mann

M. Liu

L. Black

B. Rose

J. Diaz

K. Chen

T. Wong

V. Aries

S. Valle

Key:

Promotable now

Promotable with training

Not promotable

To be dismissed


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Women and minorities. The landmark legislation designed to ensure equalemployment opportunity is the Civil Rights Act of 1964. In 1965, President Lyndon B.Johnson issued Executive Order 11246 (amended by Executive Order 11375 in 1967).These executive orders obligated employers to go beyond the provisions of

nondiscrimination of the Civil Rights Act and to actively seek out women and minoritiesand hire, train, develop, and promote them. In 1972, Congress established the EqualEmployment Opportunity Commission (EEOC) and passed the Equal EmploymentOpportunity Act. This amendment to the Civil Rights Act of 1964 extended thejurisdiction of the EEOC and gave it the power to initiate court action againstnoncomplying organizations.

Older workers. Congress passed the Age Discrimination in Employment Act in1967. The act originally prohibited discrimination in employment of those people fortyto sixty-five years of age; the act was amended in 1978 to move the top age from sixty-five to seventy years; and in 1986 the upper age limit was removed. In essence, the law

prohibits discrimination in hiring, firing, compensating, or any other conditions of workof any person forty years of age or over. Exceptions to the legislation include tenuredfaculty and some high-salaried executives or for documented health- or performance-related reasons.

The handicapped. The Vocational Rehabilitation Act was passed in 1973 andamended in 1978. The act requires employers who have a contract with the federalgovernment worth $2500 or more to take affirmative action to hire and promote qualifiedhandicapped persons. A handicapped person is defined as any individual with a physicalor mental disability that limits normal activities such as walking, seeing, speaking, orlearning. The law stipulates that the handicapped individual must be capable ofperforming the particular job for which she is being considered.

Veterans. The Vietnam Era Veterans Readjustment Act of 1974 requires

employers with federal contracts to take affirmative action to employ disabled veterans.The act also provides job assistance for Vietnam-era veterans in the form of jobcounseling, training, and placement.

Equal employment opportunity. Equal employment opportunity (EEO) is theright of all persons to work and to advance on the basis of merit, ability, and potentialwithout regard to race, color, religion, gender, or national origin. Table 1 summarizes theprimary legal base for EEO and supporting legal activities. The provisions of these actsgenerally apply to all public and private organizations employing fifteen or more people.The EEOC administers and federally enforces the various equal employment opportunityacts. The EEOC provides assistance to employers in developing affirmative actionprograms and in resolving discrimination complaints brought against employers.


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Table 1

Major Laws Affecting Hiring Practices

Affirmative Action Programs

Whereas EEO legislation prohibits discrimination in recruitment, hiring,promotion, compensation, discharge, affirmative action programs are designed toincrease employment opportunities for women and other minorities including veterans,the aged, and the handicapped. Based on two executive orders, originally issued by

President Johnson, affirmative action requirements apply to public and private employersand educational institutions that either have contracts with or receive monies from thefederal government. The intent of the program is to ensure that women and otherminorities are represented in the organization in percentages similar to their percentage inthe labor market from which the organization draws personnel. For example, if the laborpool in a community is 15 percent black and 5 percent Hispanic, then 15 percent and 5percent of the labor force of an organization operating in that community should be blackand Hispanic respectively.

Law Basic Requirements

Title VII of the Civil Rights Act of 1964 (as

amended)

Prohibits discrimination in employment on the

basis of race, color, religion, gender, or

national origin.

Age Discrimination in Employment Act of

1968 (as amended)

Prohibits discrimination in employment against

any person 40 years of age or over.

Equal Pay Act of 1963 Prohibits wage discrimination on the basis of

gender; requires equal pay for equal work

regardless of gender.

Rehabilitation Act of 1973 Requires employers to take affirmative action

to employ and promote qualified handicapped

persons.

Pregnancy Discrimination Act of 1978 Requires employers to treat pregnant women

and new mothers the same as other employees

for all employment-related purposes.

Vietnam Era Veterans Readjustment Act of

1974

Requires employers to take affirmative action

to employ disabled Vietnam War veterans.

Occupational Safety and Health Act (OSHA)

of 1970

Establishes mandatory safety and health

standards in organizations.


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In general, affirmative action programs should include the following (Kranz,2012): (a) making concerted efforts to recruit and promote women, minorities, thehandicapped, and veterans, including recruiting through state employment services and atminority and womens colleges; (b) limiting the questions that can be asked in

employment applications and interviews; (c) determining available percentages ofwomen, minorities, and the handicapped in the labor market; (d) setting up goals andtimetables for recruiting women, minorities, the handicapped, and veterans; and (e)avoiding testing unless it meets established guidelines.

Conclusion

Human resource planning begins with a forecast of the number and types ofemployees needed to achieve the organizations objectives. Planning also involves jobanalysis, which consists of the preparation of job descriptions and job specifications. Of

particular concern for todays executives is the growing body of laws regulating thehuman resource management process.

References

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Cushway, B. (2011). The employers handbook: An essential guide to employment law:Personnel policies and procedures. Milford, CT: Kogan Page.

Gibson, J. L., Ivancevich, J. M., Donnelly, J. H., & Konopaske, R. (2012).Organizations: Behavior, structure, processes (14th ed.). New York, NY:McGraw-Hill Irwin.

Henderson, H. D. (2010). Supply and demand. Kila, MT: Kessinger Publishing.Kranz, R. (2012).Affirmative action (rev. ed.). New York, NY: Facts on File.McCormick, E. J., Mecham, R. C., & Jeanneret (1972). Technical manual for the position

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